Toronto Star: Detached Home Prices Fall While Condo Prices Soar in October

Elli Davis

5 months ago

The average selling price in October was $780,104, up 2.3 per cent compared with October 2016. The average price of a home — including all housing types from apartments to detached houses with yards — rose 2.3 per cent in October to $780,104, compared to $762,691 last year.

The usual seasonal bounce in re-sale homes between September and October was more pronounced than usual this year in the Toronto region, growing 12 per cent.

But there were still 2,597 — about 27 per cent — fewer sales this October compared to the same month last year.

Home prices also rose 2.3 per cent year over year in October, but new numbers from the Toronto Real Estate Board (TREB) on Thursday showed some areas are doing better than others.

The average price of a home — including all housing types from apartments to detached houses with yards — rose 2.3 per cent to $780,104, compared to $762,691 last year.

But detached house prices were down 2.5 per cent across the region — a 4 per cent decline in the 905 area to an average price of $910,488 and, a 1.1 per cent drop in Toronto to about $1.3 million.

Condos, however, continued to perform well, up 21.8 per cent across the region to an average price of $523,041.

The divide between the City of Toronto and the surrounding region is a function of the housing stock that’s on the market, said Jason Mercer, TREB’s director of market analysis.

In the 905 there are more detached homes on the market, he said, “so you haven’t seen as much upward pressure on prices there.”

TREB’s annual survey will show how the new mortgage stress tests introduced last month are impacting consumers’ buying attitudes, said Mercer.

“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” board president Tim Syrianos said in a press release.

Royal LePage agent Elli Davis, said the number of homes she sold last month was almost identical to the same period last year. After a lull in the summer, buyers are starting to come back to the market, she said.

“Condos under $500,000 are flying,” said Davis.

There is also scarce supply to feed the demand from downsizing buyers for condos priced between $1 million and $3 million.

“We have very little supply, so when a listing comes out everybody’s running to it,” she said.

Some sellers still haven’t adjusted to the new market realities and are pricing their properties in the expectation of selling for the prices their neighbours garnered earlier this year or last year, she said.

Some are struggling with whether to sell their home before buying another.

“A lot of people are still buying first, but they have to be cognizant of what their property will sell for so they can be realistic when we get to that point,” said Davis.

South of Bloor St., from Etobicoke to the Beaches, houses are still selling in multiple offers and two- and three-bedroom condos are being snapped up, said Ara Mamourian broker-partner at Property.ca in Leslieville.

“But what’s really going nuts is the rental market right now,” he said. “We can’t keep a rental property on the market for more than 24 hours without at least two or three applications on it.”

Some consumers have been priced out of the home ownership market, said Mamourian.

“They don’t have the down payment money, but they certainly do have the monthly cash flow to float a nice, high-quality rental. That’s why we’re seeing the $3,000- to $4,000-a-month rental market really do well,” he said, adding that it’s difficult to find a one-bedroom apartment for under $2,000 a month.

“We’re seeing folks double up, taking on roommates, taking on two-bedroom apartments for $1,200 to $1,300 each, versus a one-bedroom that would cost them $2,000,” he said.

In Oakville, where ground-level housing comprises the largest share of the market, things are slower, said Century 21 Miller agent Jamie Vieira.

“Everybody assumed that we’d get busy because of the mortgage rules coming in effect Jan. 1, so there would be some rush to buy but that doesn’t seem to be happening,” he said.

“We have a lot of inventory sitting around and (sellers) trying to wrap their heads around the price. September was slow too,” said Vieira, adding that prices are nowhere near what they were in March and April when the Toronto region housing market peaked.

TREB reported 888 active listings this October compared to only 400 last year. While the average Oakville home price of about $1.09 million is up about $43,000 year over year, the median price fell $67,500.

“We’re up at the peak inventory we had at the end of June and sales are 45 per cent down. Take those two things combined and it’s not a good market,” said Vieira.

In April Toronto region home prices peaked at 33 per cent above the previous year. But the provincial government’s Fair Housing policies, including a foreign buyers tax, immediately cooled the market.

That was followed by two hikes in the Bank of Canada rate and, more recently, more mortgage stress testing rules by the Office of the Superintendent of Financial Institutions.

The CHMC warned last month that the country’s hottest housing markets remain “highly vulnerable” with evidence of moderate overvaluation and price acceleration in Toronto, Hamilton, Vancouver, Victoria and Saskatoon.